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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Note 5 — Income Taxes The deferred tax assets and deferred tax liabilities and related valuation allowance were comprised of the following:
|  | December 31, |
|  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Derivative financial instruments |  | $ | — |  |  | $ | 267 |
Net operating losses |  |  | 13,643 |  |  |  | 5,525 |
Research and development credits |  |  | 23,012 |  |  |  | 21,494 |
Depreciation |  |  | 5,457 |  |  |  | 3,886 |
Valuation reserves and accrued liabilities |  |  | 9,667 |  |  |  | 5,553 |
Foreign tax credit |  |  | 6,926 |  |  |  | 1,654 |
Stock compensation |  |  | 4,508 |  |  |  | 3,129 |
Inventory |  |  | 1,571 |  |  |  | 1,622 |
Patents |  |  | 218 |  |  |  | 156 |
Defined benefit obligation |  |  | 2,306 |  |  |  | 2,011 |
Other credits |  |  | 639 |  |  |  | 639 |
Other |  |  | 116 |  |  |  | 10 |
|  |  | 68,063 |  |  |  | 45,946 |
Valuation allowance |  |  | (19,304 | ) |  |  | (13,418 | )
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets |  |  | (8,442 | ) |  |  | (10,161 | )
Unrealized foreign currency exchange gains |  |  | (285 | ) |  |  | (3,797 | )
Undistributed profits of subsidiary |  |  | (12,002 | ) |  |  | (3,254 | )
Property and equipment |  |  | (470 | ) |  |  | (696 | )
Other |  |  | (319 | ) |  |  | (342 | )
|  |  | (21,518 | ) |  |  | (18,250 | )
Net deferred tax asset |  | $ | 27,241 |  |  | $ | 14,278 |
Reconciliations between the statutory Federal income tax rate of 34% and the effective rate of income tax expense for each of the three years in the period ended December 31, 2016 are as follows:
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Statutory Federal income tax rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
Increase (Decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Taxes on foreign income, net of taxes paid credit |  |  | 1.3 | % |  |  | 1.0 | % |  |  | 0.3 | %
Change in valuation allowance |  |  | 5.3 | % |  |  | (1.9 | %) |  |  | (0.8 | %)
Foreign, state and local tax, net of Federal benefit |  |  | 1.1 | % |  |  | 1.6 | % |  |  | 1.9 | %
Nondeductible expenses |  |  | 2.4 | % |  |  | 1.8 | % |  |  | 1.8 | %
Stock option compensation |  |  | — |  |  |  | (0.1 | %) |  |  | (0.1 | %)
Research and development credits |  |  | (0.7 | %) |  |  | (0.9 | %) |  |  | (0.5 | %)
Effect of different tax rates of foreign jurisdictions |  |  | (15.0 | %) |  |  | (12.1 | %) |  |  | (10.0 | %)
Undistributed profits of subsidiaries |  |  | 7.9 | % |  |  | 2.4 | % |  |  | — |
Other tax exempt income |  |  | — |  |  |  | (0.1 | %) |  |  | (0.9 | %)
Tax effects of intercompany transfers |  |  | (5.3 | %) |  |  | — |  |  |  | — |
Other |  |  | (0.3 | %) |  |  | 0.3 | % |  |  | (0.1 | %)
Effective rate |  |  | 30.7 | % |  |  | 26.0 | % |  |  | 25.6 | %
Note 5 — Income Taxes (Continued) The Company has Net Operating Loss (“NOL”) carryforwards as follows:
Jurisdiction |  | Amount as of December 31, 2016 |  |  | Years of Expiration |
U.S. Federal and state income tax |  | $ | 25,364 |  |  |  | 2018- 2035 |
Foreign |  | $ | 9,879 |  |  |  | 2018-2037 |
Foreign |  | $ | 47,707 |  |  |  | Indefinite |
On April 1, 2014, we acquired all of the stock of GPT in an all cash transaction. The deferred tax assets in 2016 and 2015 related to research and development credits and the offsetting valuation allowance are primarily a result of the GPT acquisition. A portion of the U.S. Federal NOLs was incurred prior to the June 8, 1999 Preferred Financing, which qualified as a change in ownership under Section 382 of the Internal Revenue Code (“IRC”). Due to this change in ownership, the NOL accumulated prior to the change in control can only be utilized against current earnings up to a maximum annual limitation of approximately $591. As a result of the annual limitation, approximately $6,025 remaining of these carryforwards are expected to expire before ultimately becoming available to reduce future tax liabilities in addition to $13,324 in NOLs generated prior to the change in control which have already expired without being utilized. In 2014 through 2016, we incurred NOLs in Vietnam associated with the startup activities of new production facilities. In 2015 and 2016, we incurred a loss in Ukraine associated with foreign currency losses. These NOLs are expected to be utilized in 2017 through 2019 as the locations become profitable. We also incur NOLs in Luxembourg associated with our global holding company structure. Management has concluded that it is more likely than not these NOLs will not be utilized, and thus has not recognized the benefit of these NOLs. We recognize the tax benefit of stock option exercises in excess of compensation expense recorded for financial reporting purposes directly to paid-in capital only when this excess tax benefit provides a reduction to current taxes payable. In certain previous tax years, our U.S. Federal NOLs completely offset our current Federal tax liability and, therefore, we did not recognize the benefit of tax deductions allowed for stock option exercises in excess of compensation expense recognized for financial reporting purposes. As such, in those years, our deferred tax asset related to NOLs was less than the actual NOL available. In 2016, we utilized the entire U.S. Federal NOL carryforward available which included the benefit of tax deductions in excess of compensation expense for financial reporting purposes. We recorded this benefit, which totaled $7,509 and $6,681 for 2016 and 2015, respectively, directly to paid-in capital. The U.S. Federal NOL carryforwards include $0 and $22,343 for 2016 and 2015, respectively, relating to deductions taken with respect to stock option exercises in excess of amounts recognized for financial reporting purposes. The U.S. State NOL carryforwards include $17,564 and $17,213 for 2016 and 2015, respectively, relating to deductions taken with respect to stock option exercises in excess of amounts recognized for financial reporting purposes. This portion of the NOL carryforwards is not included as a component of the Company’s deferred tax asset. The earnings before income taxes and our tax provision are comprised of the following:
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 12,981 |  |  | $ | 25,508 |  |  | $ | 11,170 |
Foreign |  |  | 97,582 |  |  |  | 103,430 |  |  |  | 83,051 |
Total income before income taxes |  | $ | 110,563 |  |  | $ | 128,938 |  |  | $ | 94,221 |
Note 5 — Income Taxes (Continued)
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current income tax expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 9,215 |  |  | $ | 8,428 |  |  | $ | 4,005 |
State and local |  |  | 749 |  |  |  | 606 |  |  |  | (15 | )
Foreign |  |  | 32,844 |  |  |  | 24,622 |  |  |  | 24,737 |
Total current income tax expense |  | $ | 42,808 |  |  | $ | 33,656 |  |  | $ | 28,727 |
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (10,597 | ) |  | $ | (3,051 | ) |  | $ | (576 | )
State and local |  |  | (742 | ) |  |  | (183 | ) |  |  | 9 |
Foreign |  |  | 2,496 |  |  |  | 3,123 |  |  |  | (4,058 | )
Total deferred income tax expense |  | $ | (8,843 | ) |  | $ | (111 | ) |  | $ | (4,625 | )
Total tax expense |  | $ | 33,965 |  |  | $ | 33,545 |  |  | $ | 24,102 |
The Company has recognized deferred taxes related to earnings from foreign subsidiaries, except for certain foreign subsidiaries for which the earnings are permanently reinvested. Quantification of the deferred tax liability, if any, associated with permanently reinvested basis differences is not practicable. The Company is subject to taxation in the United States and various state and foreign jurisdictions. As of December 31, 2016, the Company’s tax years from 2008 through 2016 are subject to examination by the various tax authorities. With limited exceptions, as of December 31, 2016, the Company is no longer subject to U.S. Federal, state, local, or foreign examinations by tax authorities for years before 2008. Tax audits are currently ongoing in Germany for tax years 2008 through 2011. During 2015, to entice the Company to construct a new facility in Macedonia, the government of Macedonia granted the Company a tax holiday that released the Company from the obligation to pay corporate income taxes for a ten year period, subject to certain limitations. The amount of corporate income tax savings realized by the Company as a result of this tax holiday during 2016 and 2015, respectively, was zero as a result of operating losses generated during each period. The aggregate dollar effect and per share effect of the corporate income tax holiday during 2016 and 2015 was immaterial. At December 31, 2016, 2015 and 2014, the Company had total unrecognized tax benefits of $4,486, $4,443 and $4,651, respectively, all of which, if recognized, would affect the effective income tax rates. The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  | 2014 |
Balance at beginning of year |  | $ | 4,443 |  |  | $ | 4,651 |  | $ | 2,241 |
Additions based on tax position related to current year |  |  | 80 |  |  |  | — |  |  | 43 |
Additions based on tax positions related to prior year |  |  | 366 |  |  |  | 262 |  |  | 2,991 |
Reductions from settlements and statute of limitation expiration |  |  | (299 | ) |  |  | (19 | ) |  | (432 | )
Effect of foreign currency translation |  |  | (104 | ) |  |  | (451 | ) |  | (192 | )
Balance at end of year |  | $ | 4,486 |  |  | $ | 4,443 |  | $ | 4,651 |
The Company classifies income tax-related penalties and net interest as income tax expense. In the years ended December 31, 2016, 2015 and 2014 income tax related interest and penalties were insignificant. The Company believes that it is reasonably possible that there may be a decrease to its unrecognized tax benefits in the next 12 months due to audit settlements and statute expirations, but the amount expected to reverse is insignificant in relation to the consolidated financial statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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